still hunting yields. >> i like live nation. >> all right. thanks so much for watching. see you back here tomorrow at 5:00. mad money starts right now. . . >> i'm jim cramer and welcome to my world. >> you need to get into the game. >> he's nuts! they're nuts! they know nothing. >> "mad money," you can't afford to miss i. hey, i'm cramer. welcome to requested mad money." others want to make friends, i'm trying to make money. my job is to make money, call me. earnings season. i dread earnings season. why? because it is overwhelming with so many companies reporting at once, so much data being thrown

at you. because it's hard to deep track of expectations and what is better-than-expected. the whisper, what the real benchmark must be beaten is. no, it's because i have a really bad back. i can't stand carrying out those bad versions of conference calls in downtown manhattan to my studio here where i do "mad money." but tonight i want to do something difficult. i want to offer you a new way to use earnings season to put it in perspective, because most of you watching the show are not these day traders that hijack a lot of the thinking. because it has become so difficult to predict and often the initial moves aren't even accurate because of the press coverage or because something is accurate because of europe or something involved in the election. in other words, other than for those who are shorting or going long stocks ahead of the quarter, these earnings report need a context to make you

money. they can't be relied upon because they aren't as predictive in future behaviors as they once were. they are a piece of the puzzle, a part of the mosaic. they are only one of many of the important parts that predicts where a stock will go over the intermediate term. that tends to be the focus i tend to teach in the show. it is a teaching show. because i want you to know the metrics side using the pick stocks and recommend here. i also want to teach you how to listen to these conference calls or read them in the transcript, at least give you my opinion of what matters on these calls and how i let them factor in picking stocks. i am hoping this show will once and for all, this is what i see on jim cramer, how to figure out what you need to trip, what you need more of. let it help your stock selection hone your way of thinking. earnings season is incredibly important, where times of the year, billing report cards, hey,

not just the trajectory of the estimates, we have to flush that all out. i'm so tired the estimates are bumped a penny or two. that's not making anybody any money. we can't dismiss earnings season. that would be totally wrong. here's how i use these reports that we constantly refer to. first, i assess them for the predicted value for the year. to do that, i troo i to discern where -- i try to discern where analysts go, do they raise them, lower them, do they keep them the same? all right, let's say apple's report is better than the posting numbers on a lot of websites but beats what is the high man, some call at this time whisper, the high man the analyst with the high estimates on the street. that, people, will always cause a raising of numbers for the rest of the year by everyone or if it is the end of the year for the numbers in the year after it. i use that increase in earnings per share, the ones that they bump it, okay, to figure out several things.

first, i try to figure out the increases from real business, actual sales, do they do better? not just accounting changes. the latter fools a lot of people. to do what i like to do, i look at the revenue shares. why is that important in the because they can produce more, gain more customers either at the expense of others, execution, they're making a better job. they're doing a better company. they're working harder. they're working it better. but a company can easily change the earnings, not the sales line, but the earning, simply changes the denom ter, the in of shares, revenue growth, particularly the holy grail, accelerated revenue growth, argh, quarter to quarter, year over year, they allow me to figure out future revenue, which is what i talk about on the show. that allows me to figure out what to pay for the stock in the

future. lots of people make a determination of the stock's worth in what i call the p.e. volume. -- vacuum. when the average stock sells at 11 times the s&p. they say, ah, that's too expensive, it sells much more than the average stock. lazy thinking. what you need to do is figure out what that growth is using the revenue prism i fixed out for you. think of the previous quarter and the current one and the year over year quarter. then calculate that trajectory vs. the growth rate. it's simple, if the earnings are 20%, it's 20 or less person e earnings per share, hey, you probably have a big bargain on your hands. we call that a peg ratio. again, the price to earnings growth ratio, a must more important ratio, it puts it into context you can use versus other stocks. we are always comparing other stocks on the show. as a rule of thumb, i may be

paying up to twice the amount of the company. especially if there are many companies growing that fast. other than that, paying 70 times earnings for companies, 40%? it gets me nervous. even a 40% growth is very hard to come by. that's nose bleed territory and there are too many things that can go wrong with the stock when that happens. the converse is true, too, when i see a stock less than its earnings growth, i begin to salivate, the factors we cover in the rest of the special show, i am drawn to that stock i have to find other reasons not to buy. so the bottom line, i use the actual growth per share reports to figure out the growth rate of the stocks and if the growth rate is high and the price per earnings in the future projections is equal to or less than the growth i am interested in, enough to proceed with the rest of the work this show will detail. i need to go to brad in south

carolina. brad. >> caller: jim, i want to give you a ron paul boo-yah to you. >> wow, that's aggressive. i'll take get go ahead. >> caller: jim, i'm wondering how to best prepare for this earnings season, give me the inside scoop of what your browser tab would like like -- look like as you stay on top of the market updates. >> what i like to do, first of all, i watch cnbc. i fully go to the websites. the websites are now so, so good that literally they will have the supports. they will have a lot of projections. then i like to look at the news stories to get a consensus. then i look at the analyst reports the day in. all that has to be done if you are going to really sink your teeth in and feel very confident. start with the website of the stock. let's go to darryl in california. please, darryl. >> caller: jim cramer.

>> boo-yah. >> caller: i have a question there, what is meant by a reverse split stock? >> okay. that means there is a million shares. let's say they do a 3:1. citigroup did one of these, okay. what it does is if you have like 300 billion share, you divide it by 3. you get 100 billion. it raises the price. you have loser shares. let's go to tiler in florida, hey, please, timer. >> caller: i want no give you a south florida boo-yah. >> i need go there now. what's up? >> caller: sunshine, no, it's overcast, a quick question for you, when you talk about the economy booting off again, it seems like you talk about it in terms of consuming, not producing. i'm thinking from the way i think about it, you need something to be produced before it's consumed. so i'm wondering why in terms of a growing economy, you talk about consumption instead of production. that's what it seems like to me.

>> well, i do, in order to be able to raise price, you need demand. if there is a shortage of supply, sure, that can mean something, not if you have demand, if you have some product nobody likes, you can't raise the price, it doesn't mean anything. that's why we focus on demand. a company has their stars before you buy i. use the eps to figure out the company's growth rate. take it from there. "mad money" will be right back. .

special earnings season companion show. we but them in perspective so you can profit in a warm and confident way, make money at home. we went over how i like to use the reports themselves and went over to figure out whether it's too expensive or too cheap against its sector and the rest of the market f. next way i use the earnings report is equally important because i call it the

etfization of the market. i measure thing tos earnings growth against its cohort. then i figure out whether -- here it is -- the whole cohort is worth earning or forgetting about. wow! that's right. for most of my three decades of investing, i decide it's important when you pick a stock that matters, the stock sector counts maybe as much as 50% of the stock's performance. you know what, now, because so many trade through ets, and they have become so popular for individuals and, more importantly, for hedge funds to take quick action, it supersedes earnings sometimes, i got to tell you, often it's made for an afterthought. take for the way the banks traded, it didn't matter whether the bank did a good job or a bad job. people didn't want to own the x-11. it didn't matter how well a bank

did. wells fargo, very strong management, j.p. morgan, morgan stanley, they had tremendous exposure on the condition. that's why at times i had to dismiss it entirely at the moment if the co hart was radically outfavored. i never forgot them. instead, i figure out which ones at times can break the tug of the sector the graphtational pull and which ones can shine, because if the sector falls back into favor, i got to be ready. for example, remember the march bottom generational. we seen many sectors within those sectors at a poevenlt i like to listen to the earnings calls of all the retailers. given times, i am wrapped by the groups doing the best. by far, the best have been the discount stores, particularly the dollar stores, dollar

general and dollar tree. when i see the market tied at retail, i go to reach for these two. because i know they have the most earnings momentum. i only know that because i keep listening to the calls, even though the group may have been out of favor of late. so when everyone calls into the regional etf, i tuesday rfh, i am in there with the ones with the best momentum. certainly, i use the ross store, etf when they grab a sector, because they have the most inexpensive earnings per momentum. when i know which are the best of the best in terms of earnings, because i focussed on the calls and a huge amount of money was given to the sector, i hedge my bets, sell the etf and buy the best performers. that way, if the move takes a turn for the worst, one of those government numbers or we get weakness out of europe, i can

lose less, because i own the best and i am short the rest. sector analysis is particularly important with technology because people confuse this stock which comprises 15% of the s&p 500 constantly, tech is a whole group of sectors, semi conductors, software, cloud, internet, hardware makers, sfoents, tech, telecommunications tech, infrastructure stock, assemblers, each has a separate growth rate. here i like to look at the companies i file versus the individual sectors. the investigator growth rate doesn't work. cloud stock, for example, are highly valued, meaning the high values to growth rates are extreme. that means there is no room for error or hair as we call it. in 2011, one of my favorite cloud replaced a magnificent corps. the guidance was later than i was hoping.

the stock immediately got pancaked and stayed ugly for a long time. why? because it underperformed its portion of the technology sector even as the growth rate would have been outstanding for a personal computer-related block or a cellphone company. these days knowing what the sector is isn't enough. you need to know the subsector. you need to know how your company stacks up against the growth rate of that subsector. you need to have a good handle whether that larger is in favor or isn't. the bottom line, nothing is worse than a bad stock in a bad seccor neighborhood. nothing is better than owning a good stock in a good stock neighborhood. if you do not match the sector growth and do not determine whether the sector is in favor versus out of favor, then the earnings report better than expected or not, it won't mean a thing. when we return, i will give you several more ways to use these reports in the context of stock picking, not just trading. the drive you will come to see is pretty much a zero sub game.

stay with cramer. i know what you're thinking...

transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. >> >> nobody is more passionate about in market, nobody in this country. >> i want to see if you have received my retirement. >> you are why i come out here and do this show. thank you so much.

>> the stuff that you are doing for all of us is so important. i just want to say thank you. >> my husband and i watch every day. we count on your help for small investors like us. >> put cramer's 30 years of experience to work for you "mad money" week nights on cnbc. [ music playing ] >> tonight we are talking not about who just reported better-than-expected quarter, getting all excited about that, something we get caught up in every earnings season, but how to use these seasons to put together the ideal portfolio for the long term. we've stabbed the importance for what they tell us for a stock and where it fits inside the sector as well as the sector gaffetational pull. -- gravtational pull. now we got to dig further to discern what elsewhere on the conference call or in reaction to the call that can help us make some money. we don't stop with just the

call. what else is important to listen to one of these? the wall street analysts would tell you the most important predictor of future earnings is the gross margin, what is left after the cost of sales are subtracted. i like to put it the way any kid can understand, the lemonade stands. you have no understand phlegmen, yeah, you add sugar, you figure out what those cost, you take away your ingredients the number of people that saturday behind the stand the labor the equipment, the time you paid someone else to stay behind the stand. we try to figure out the cost of the sales, when they are going up or down. that itself the inflation/deflation component, how much the labor costs, how much leverage there is, me, if you have all the labor accounted for, how much business can you do? there is not a lemonade stand, it is pretty well known, it's

chipotle. they have posted fabulous gross margins. they have labor, food, customers. the more customers they can serve per hour the more leverage they have. the cost of the beef the chicken, the tortillas, the cost of the labor, most importantly the number of customers they can push through. their dozen inputs, advertise and lease of the stores, they need to have little turn joseph as possible because the cost of training employees is tremendous, it's a huge obstacle of making money. that's what the former president of costco made it important to us. they treat them with the best of benefits because it's so important to keep them happy so the firm doesn't constantly have to traid train new people. they like to see the same old hopefully smiling faces, new people cost too much money. same goes for chipotle where the most talented people are given promotions and opportunities to run more stores. mcdonald's, similar, often

praised for its gross margin improvements. it can get below cost goods, it had good leases, also because it has the technology innovator on a scale. they got huge leverage per hour. gross margin comes into play always in different ways. often the key to the gross margin has less to do with the cost structure and more to do with the inventory conditions of an industry or a given company. now, we're talking tech. semi conductor companies, for example, produce flat out as many as they can, 24/7. at times in demand wanes and the supply chain gets overglutted. they have to cut price, which then lowers their gross margins and often makes their earnings too volatile to predict and, therefore, they would give them a high multiple. that's when there is too much inventory. we like companies with consist

growth. we pay for get no one can handle all that inventory glut that keeps happening once or twice a year. same goes for companies like steel and ilum number. -- aluminum. prices get slashed, the future earnings per share get crushed. i listen closely on these commodity calls to get a sense if inventory is building anywhere in the system. if it is, i got to get you out of those stocks quicker than i do. aluminum, steel, copper, i got to work faster. don't you believe for one moment it's just the commodity producers affected by these. i listen to every single pharmaceutical call. a drug company with a patent cliff, meaning a drug coming off a patent that will plummet in price is one that scares me. i tell you to get out. i think it will trade at future earnings. until the stock discounts that,

i got to keep you out of it. very few drug companies are immune from this gross margin compression. i steer clear from them as best as i can until everybody knows about the patent cliff. then i can go back. finally there are the oil and service companies. these are the hardest. they're difficult. you often have to figure out several numbers, how much it cost to drill to get it in and out of the ground, the shipment to refine it. many companies in this industry are trying to break it up to make it easier for guys like me, instead of having to be a blend that i got to unwrap. i care chiefly about finding costs and end market prices, that's why the natural gas companies traded in discount the end market has been so low for so long and the end market price of crude has been so high so long. that's what draws me to a company like eog or continental. both cheap refining costs for oil. they got expensive prices when they get it out of the ground,

bottom line the key component after figuring out the earnings per share trajectory and its growth related to the cohort is to figure out the future gross margins. something that is uniquely calculated only by listening to the conference calls. you can't get that in the headlines of any of the reports, if you don't know that, you won't know the direction your stocks are to take in the portfolio. it is an integral part of the homework, be sure to read from the analysts who do. let's go to brad in ohio, please, brad. >> caller: a boo-yah from girard, ohio, jim. >> i got to get there. i haven't been there yet, i'll get there i promise myself. >> caller: thanks for taking my call. the question is, as an investor in specialty retail, i understand the fourth quarter is the quarter with the most significant earnings, but how should companies evaluate the first quarter companies? >> i used to go back to the rules at my hedge fund, i

frankly don't care about the first quarter for retail. the first quarter is not meaningful enough. you only have valentine's day during this quarter. i know this, my dad sells gift wrap, it's 21 of those things that valentine's day doesn't move like the season christmas. i'll say i make my judgments on the fourth quarter. that's all that matters, i wait the hear those quarters, then i make my judgment for what the next year is going to bring. mike in illinois. mike. >> caller: cramer, this is mike in illinois. you see i give you a chicago bears bbbb boo-yah. cramer, if i'm short a stock, how long do i have to cover that short? >> forever. forever. that's one of the great things about shorting. stay short for as long as you want. remember, put a lot of money out, though, that's where people get squeezed. okay. you got to dig deep, gross margins will guide you in figuring out the direction of a

stock. some things you only find on the conference calls, not the headlines, gross margins, that's on the call. stay with cramer. . .

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to talk with an insurance expert about everything that comes standard with our base auto policy. and if you switch, you could save up to $423. liberty mutual insurance -- responsibility. what's your policy? . >> you're hearing tonight for the first time, not how to figure out what's a better or worse expected earnings report, trade seems to be a dominant way of thinking, but how to put these reports to work for you, select the best stocks, prune those to go. we figured out the growth rate of a company whether it's too

expensive, something at jim cramer on twitter. i keep getting that question, now it's answered. we explained the sector analysis as a part of the earnings report. and the gross earnings, now we must address two more pieces of the earnings puzzle, these are important. dividend growth and home run potential. pretty much from the time i first bought stocks in the late 1980s until fairly decent dividends were an afterthought since i had my hedge funds. companies find it as a way to return money to shareholders. to me it's oxymore raonic. -- oxymoronic. are the executives who get paid for hitting certain earnings based targets. they do that by shrinking the flow, through buying back just enough stock when the share count is divided into the earnings per share, well, it

beats the compensation benchmark that they were supposed to hit. only a very handful of buybacks do what they are supposed to do. that is make it so there are for fewer shares out there, suddenly, the earnings are excellent. but the buyback that accomplishes that goal, i got to tell you, i count them on one hand, companies spend a gigantic amount of cash buying stock when they were appreciably higher, they only know about stocks, not business. they should stop trying to tie the market. what are good companies doing now in they are offering more and more bountiful dividends. buybacks are indefinite, it's reigned in, dividends are an out and out long-term confidence. now that low rates seem to be upon us for some time, courtesy of the fed on the smoldering economic embers, dividends can provide a rate of return for the deposits you keep trying to make

money but can't. they make more money than cds, they can go down. they can also go higher. that's the case of companies that boost their dividends year over year. if you reinvest those dividends, you can augment your return to the point where you are far receiving bond. dividends are responsible for almost 40% of the s&p they are concerned for the dow jones average, far outperform the s&p 500 in 2011. 5.5% return for capitalization. how about if you reinvest the dividend, the only thing you should be thinking about is reinvesting dividends, cash in your pocket. a safety net during bad times and a trampoline to the god. so what do the earnings have so often we seek on "mad money?" you listen for calls that tip management's hands. you tell us there is enough excess cash available, perhaps several times in a short period of time, hey, that's always hurt

from general electric in 2011. it was on every conference call, conversive, if a company's desire is to buy back more stocks and the buyback is ineffective in reducing the share cap, you got to look at how many shares it had in the year before the year before, you should presume it's about management to the less proven innocent. they're seeking to share the shares offered to management. a lot of tech companies do this as i guard it as disgraceful. i know what i see. these days if management doesn't indicate it will boost the dividends, unless the company has such ferocious earnings power, ala apple, we need to listen to a breakout, something new,ing the company is going to do differently or announce soon that can be an upcoming catalyst. i talk about cat a lith. i scrutinize calls not so much for what has happened, that doesn't interest me, but

something that will happen. if i hear something that can propel the strong in the future, i am anxious to buy it. if there is a sell-off, buy enough or didn't guide high enough to please the momentum funds in the stock, i got my tonne. so what are the examples i look for? pharmaceutical companies often telegraph what might be going into stage three, okay, meaning what drugs might be near file approval. they often tell you about expanding usage on the labels. one company has told you more about if future on its call than just about any other, it has been a terrific buy. every time it sells off after earnings because of this upcoming catalyst, sell g, same thing. they give you a call. tech companies answer about upcoming product cycles, product initiations can make a huge difference in future earnings. pipeline companies, key creators, they tell you about upcoming expansions.

the expiration production companies almost always tell you what prospects they're looking for. you might hear some good news on these calls. i file those away and wait for if oil futures to go down. i started out last year, they gave you a bountiful chance to get in before they raised new fines at the end of the year. they are talking about how the storms kept the drilling down. nobody cared. and then the stock took off when they told you that business is big and booming. the bottom line. we look at signals about the future of the calls, particular about upcoming catalysts, making them solid buys on a sort- -- on a short-term buy. the best source of wealth that stocks can give us. remember, dividends pay us to wait for things to get better. and there is no better what i to find out about the prospects for increased dividends and to listen in on the earnings calls. stick with craiger.

-- cramer. .

oxymoroni to be an unfathomable number, this is for the hedge funds to attempt profits. tonight we have showed you how you can look for signs of what to do with your portfolio over the long run because the earnings report and subsequent conference calls, the crucial thing. here's the deal, they don't have to be shoot first, ask questions later experiences. actually the opposite. conference calls are ask questions, ask questions, then ask some more questions. only then maybe take action. we are asking specifically about what the ghoet of the earnings per share might be and how expensive that would make if stock versus other stocks in the sector and other stocks as a whole, usually regarded as being the s&p 500. we want to know if they are

going to be increasing, we want to know if earnings may be beaten in the future. we are looking for signs of dividends, these days the most important things that might be boosted. we are looking for catalysts that could propel it higher after earnings season is over. that's so important at a time when many stocks sell off in a knee-jerk fashion, simply because some company didn't beat somebody's estimate. there are two more items to be gleaned from these earnings reports and conference calls. they are new ones i had to add to the equation because of the structural changes in the stockmarket over if fast few years t. first is a geopolitical rick. we never thought about it. a geopolitical risk link exposure, not just to the rising price of oil. that can be jostled by the middle east. that is always an issue. linked exposure to the saump debt of say europe. plus, we need the chinese economy.

for example, for most of 2011, banks were perceived as tremendous gifts for the troubled euro and the acute tremendousments. -- acoutrements. we got our heads handed to us. similarly, when tech is often to be considered heavily dependent upon europe. hey, as much as 25% of the earnings for tech has been deadly. we know this because the business doesn't dodge, that's how you learn about it, people, the analysts won't let them get away with it. all you have to do is listen to q & a, you will hear one out of every two or three questions about europe. asia, one out of every two questions. that's too hard a steeple-chase to go through. you want preventative earnings medicine, go through the company, if a fleurality of the questions are about europe, you know you will be in for a bruising next time. that's what the analysts are

forcing the companies to talk about. as correlated with europe as many bank and tech stocks are, it's china that contain so many cyclical earnings of the company. join global, cummin, check out freeport, peabody or dale, owning these stocks is like owning a piece of the great wall of china. you don't want to be in them when the great wall is crumbling. i have seen yum, it has a huge business through kfc and coach expanding aggressively in china. similarly, owning a steel company not paying attention to what the chinese are dumping in our markets is like taking your financial life in our own hands, how do you find out? companies as diverse as corning, 3m march to the bet of the drums these days. it's all in the pestering by the analysts. so it's pretty simple. listen to the call. don't hang up until you have

heard the last questions. you can read the transcript so you can tell how worried the analysts are about the market that didn't move if needal few years ago. one piece of the puzzle, this is incredible the earnings season, i never talked about before. we got to do this before we are done tonight. one that's become obvious to anyone that has watched this show regularly. you have to know the stock ahead of the core. so often we have chartists on our off the chart segment who trace out what a pattern might be and where stock can break down or break out if it hits a certain level. why is it so bornt? you got to rec knees the chart is the expectation game. when you hear they are too high going into the quarter. you have to recognize that if chart was the gauge of the expectation. you look at the chart. that tells you where the expectations or not. open the chart rallies to a particular rally in advance of the quarter. simply we call it the level of resistance the stocks can get hammered because of a short

failure. i don't want you to react to this kind of chartmanship. i want you to use it in your favor, which is why i say save this chart list for last. you know a good stock to buy? one with rising growth margins, a potential for dividend increase and good news on the horizon that got repulsed because it couldn't bust through resistance, that gives you a chance to get in at a price one you wouldn't otherwise be able to get because of the chart. why is this so important? because no journalist is ever going to attribute a decline in the stock to the chart. yet, so many hedge funds are reacting entirely to that chart. remember, i'm not a cartist, but i play like one when i have to. the bottom line, if the question and answer on the conference call passes through heavily national rick or currencies or crisis in europe or asia or anywhere else for that matter, be prepared for hammering this quarter. if a stock goes down big on a quarter you think should go up, remember, it may very well be

the cart talking. it gives you a chance to get in cheaper otherwise than you ever had a chance to do. now you are ready for the rest of the earnings season, go get 'em. tell them cramer sent you. dede, how are you? >> caller: i'm in beautiful marin county. >> how can i help? >> caller: i check my stocks at the end of the day, usually, you will see a little blurb on the news headlines that says, for instance, this particular stock has a close and buy balance at the end of the day and they name the shares. >> right. >> caller: what i want to know is what do these close by balances mean and do they have indications for the next day? >> i think it's more distractions. a lot of the buying may be etf related or a market on close program. it's confusing to people. we care about the fundamental also. maybe it affects the chart. maybe it doesn't. i know many people do. we care about the fundamental

stock. that would matter if you were a big broker frying to get people the best price at the end of the day. all right. it's all ni the conference calls, everybody. a company's earnings release is much more than get i need clues. clues that will signal to where a company is going. and i looic to look at the charts. anding well, call me, call cramer. . it's as simple as this.

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yes, some mad tweets on jim cramer at twitter. jim, do you often encourage gamers to do their homework. i don't recall you specifying exactly what you suggest should be involved in doing our homework. my version is to listen t t evey word on "mad money" and checking

charts. what else do you suggest we do? first of all, i wrote a book. that's the starter. you hear a stock you like, you go to the website. the websites these days have almost everything. you read about the past two quarters. i like to read the annual report. that i like to dall what the analysts are saying. i like to see what can be in the pipe. i like to see what the dividend is. these are all a part of the process long before i would think of pulling the trigger. and, by the way, i would like to think, what would make them sell it, if they missed certain things, if they missed things that went up high. it all starts with the website. here is one from trace, hi, jirnlgs as we all know, the department of defense is planning to downsize the military over the next few years as we also conclude our business in afghanistan. do you believe the large amount of dod contractors and military xoert personnel will flood the job market and increase the

demand for goods? no, trace, by the way the army and navy don't move that fast. there would be a peace dividend, that happened in the '90. i don't think you should look at this issue in a way to make money off it, though. it's really not a needle-mover. as a matter of fact, it can be negative for a lot of the defense companies, as we know. and they have been under a cloud because of these cuts. here's one from danny in new york. hi, jim, i heard you say considering the downside of an equity that you would consider a stock than a put. please elaborate. danny, i am so glad you sent me this. because if i have created any misperception that i favor shorting stocks, it is completely out of character with all my books and what i used to do with my hedge fund or trading for myself. i always do puts. i rarely do shorts because as i write in "confessions of a street addict," i was in a lot of squeezes that lost me a tonne

of money. use puts. here's some tweets, from b kelly, 01 not@jim cramer. why do you hate them so much? here's the answer. i got to tell you something, b kelly 019, i hate trapping my upside, i hate cutting off my upside. you can't make more money than when you write the call. not only that, say something goes wrong, you sell the stock, you are vulnerable doing takeover then. you are still short the call. never, ever, ever, tap your upside. that's always been my rule. i would never sell a put. that i think and i've seen it in '87, i saw that put people out of business. i saw it again in 2009. put people out of business. trust me on this i have been around for just more than three decades. frustrate me on this. okay. here's one from jeff. boo-yah, jim, what is your strategy in using stocks in general. jeff, all i care about is government pay. okay. if the government is not in the

mood to pay hospitals, if they're stingy towards hospitals, i don't want to touch them because there is not enough hospital mergers that can be done without the government stepping in saying, you know what, we got to block get with hospitals, if the government is on your side, i can be a buyer. if the government is against you. stay away but stick with cramer. . . this is america.

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